COUNTY DOUBLES FEE ON PROPERTY NOTICES

A Riverside County fee on property transactions that funds real estate fraud investigations is poised to double March 5, after a compromise reached this week by the Board of Supervisors.

The district attorney and assessor-clerk-recorder sought an increase from $3 to $10, on an expanded list of covered transactions. But the board settled on $6 after supervisors expressed concern that a larger increase would be challenged in court and difficult to justify.

District Attorney Paul Zellerbach sought an increase to beef up staffing to investigate a soaring number of fraud complaints.

The fee also defrays assessor costs of mailing “courtesy” notices to affected property owners when transactions are made involving their properties, to alert them in case they did not authorize particular actions.

The county began sending out such notices in September 2011. Whenever a document is filed that affects the title, notices are sent out and property owners are advised to contact the district attorney if something seems amiss.

“The ‘courtesy notice’ program is a way to combat real estate fraud at its inception,” Zellerbach and Assessor-Clerk-Recorder Larry Ward said in a written report to the board.

The board set the fee at $6 in a 3-1 vote, with Supervisor John Tavaglione absent and Supervisor Kevin Jeffries voting no.

Jeffries said he could not support an increase when the report failed to specify how much money the new fee would generate and how the extra money would be spent.

“Right now it’s a blank check,” Jeffries said. “And I can’t sign off on it.”

Supervisor Jeff Stone argued that all of the increase was necessary.

“This program is going to prevent a lot of abuse,” Stone said, calling $10 “a modest fee for an insurance policy.”

“This is a fee that is going to protect 2.3 million people from real estate fraud,” he said.

Two representatives from the Riverside County real estate industry spoke in favor of the proposal.

One was Gene Wunderlich, government affairs director for the Southwest Riverside County Association of Realtors, who said his group typically opposes fee hikes. But he said this one is needed, given the toll that mortgage scams exacted on the market during the housing boom of last decade.

Zellerbach cited the notorious Stonewood scheme that is said to have defrauded banks and other financial institutions out of more than $100 million and homeowners out of $30 million. Most of the affected homes were in Southwest County. A trial is under way in Riverside Superior Court for the two remaining defendants out of seven people charged in the Stonewood case.

Although the supervisors denied the original request, they invited Zellerbach and Ward to return later, to make a more detailed pitch for the higher amount.

For now, though, the fee is going to be $6. It will be assessed starting next month on deeds of trust, amended deeds of trust, reconveyances, requests for notice, notices of default, notices of trustee sale, lot line adjustments, quitclaim deeds, substitutions of trustees and other documents.

Ward said the current $3 fee generated $944,000 in 2011 and $1.07 million in 2012. Of that, 90 percent went to the district attorney’s office, with the rest going to the assessor’s office.

The cash is placed initially in a real estate fraud prosecution trust fund and disbursed as expenses are incurred.

Had the fee gone to $10, it would have generated an estimated $5.36 million annually, Ward said.

Zellerbach said the number of fraud complaints logged by his office soared to 1,874 in fiscal year 2011-12 from 926 the year before. But he said the number of investigations remained constant at about 60, and the number of prosecutions remained at about a dozen.

Zellerbach said eight people are assigned to the district attorney’s real estate fraud unit, including three prosecutors, three investigators, one paralegal and a technician. Besides more attorneys and investigators, he said the unit needs accountants, forensic auditors and other experts to fully investigate the complaints pouring in.